Technically, what you are doing is paying a
DVC member to make a reservation in your name. Since DVC members make reservations and don't pay cash, they pay using the 'points' they purchased, that's the commodity I guess you'd call it that is 'sold' or 'rented' to you.
As far as I know, there are two ways to go about doing this. One is to find an individual who is willing, presumably for an exchange of money, to make a reservation for you. The other is to find a broker or middleman who, presumably for an exchange of money, will find and communicate with the individual making the reservation.
Since you're bypassing the middleman in the first scenario, that's often slightly cheaper but puts you in the position of having to trust completely in the goodwill and integrity of the person you're dealing with. There are, of course, ways to mitigate some of the concerns - a legal contract is strongly recommended, and there are ways for you to verify both that the person you're dealing with is a DVC owner and that the reservation they create for you is a valid one. Technically, of course, there's no guarantee that they won't call Disney while you're in the air and cancel the reservation. Though, technically, there's no guarantee that the resort you've booked at didn't burn to the ground while you were in the air, so make of that what you will.
The middleman scenario, on the other hand, offers a little bit more protection in that they (presumably) have lawyers on hand to deal harshly with any DVC member who does not live up to their side of the bargain. The middleman also may have more control over the contract than you - the one that I am aware of, for example, only pays the member half of the total money due the member until the day of the reservation and then disburses the rest of the money. Many (possibly most) direct contracts with a member would require you to pay in full or at least shortly prior to your arrival at the resort leaving open some window of time where the member has all your money but you're not checked in to the resort.
As far as reassurances that you are dealing with "legit" points -- you should receive a reservation confirmation number that you can then use to verify the reservation, connect to MyDisneyExperience.com, etc. Certainly if you don't receive this in a timely manner you would be right to be concerned.
And, as regards to price -- it's strongly suggested that you do some legwork (computer work?) yourself to compare prices. The Disney Boardwalk Inn, for example, may have a special available to you that would put it close to or even cheaper than renting a DVC studio from the Boardwalk Villas. Only you will know the precise dates and budget that you're willing to work with.
Generally going the DVC route will be cheaper, but be aware that you are giving up a few amenities that may - or may not - be important to you. Some of those include daily housekeeping and the ability to reschedule your trip. While you can pay extra for daily housekeeping, it's basically impossible to reschedule a DVC stay that you've rented. If you like the idea of the "free dining" plan that Disney offers, be aware that there is absolutely no way to attach that to a DVC stay. There may be other amenities that are different - and I'm sure you'll find a list of them on many of the posts here - but my brain has stopped working so I'll stop typing.
I hope this has helped. Take your time and read through the posts. You're basically subletting from the owner, so consider it from that perspective as to what you'd need from them (or others) to feel comfortable doing that.
